Multichoice gears up for competition
Four new pay-TV services were licensed recently, ending Multichoice’s monopoly in the pay-TV market. The company is however not sitting back and waiting for the new kids on the block to invade its turf. They are investing heavily in both new content and new services to keep ahead of the game.
New offerings
The DSTV provider has announced a re-launch of their entry level DSTV Easy View offering which retails for a mere R 18-00 per month. This entry-level product will get the company’s equipment into the subscriber’s house and create a direct marketing and billing channel for potential future upgrades.
The company is also testing their new DVB-H service which provides high-quality mobile television to subscribers. This will be a sub-R 100-00 service offered in partnership with Vodacom, MTN and Cell C and it may prove popular with some of the high earners in the cellular market.
Multichoice is further planning to launch a High Definition TV service (HDTV) around the middle of next year. Details about this service are still sketchy, but the promise of major sports events in high definition will most probably be a clincher for sports fans.
Their broadband web-TV offering is also making steady progress. This is a free value-add service for premium DSTV subscribers, and will offer users the chance to download or stream content over a broadband Internet connection.
The DSTV web-TV service has been in a trial phase for many months already, and an official commercial launch can be expected in the coming months.
Market size
With five players in the pay-TV space, questions have been asked about the potential market size for pay-TV services.
Multichoice CEO Nolo Letele said that his company’s estimate is that the current untapped market sits in the region of 500 000. This figure will grow as the black middle class expands, and is expected to reach 1.5 Million in the next five years.
Letele says that Multichoice is planning to increase its current 1.3 Million subscriber base to between 2 and 2.5 Million in the next five to seven years.
This does not leave much for the other providers to fight over, and with Telkom Media’s deep pockets, ODM and e.sat may find the going tough.
The increased competition may be challenging for both Multichoice and the new licensees, but consumers stand to benefit from improved services and lower prices. The battle for market share is generally good news for consumers, and the upcoming pay-TV clash looks as if it will benefit subscribers.
Pay-TV content battle looming
One of the key components of any successful pay-TV offering is popular content – typically sport and movies in the case of South Africa.
The new pay-TV licensees are well aware of this which is why they want to see Multichoice’s exclusivity content contracts cut short. The DSTV provider however says content exclusivity is key to its offerings and competitiveness in the market.
Multichoice currently has various contracts in place giving the company the exclusive rights to a variety of programmes, something which the new entrants would like to see reversed.
Telkom Media recently said that while competition has been introduced into the broadcast sector, it believes that there needs to be proper intervention from the Regulator and the Competition Commission to ensure a level playing field.
“We would like to see the market aligned with international best practices, which we do not believe is the current situation,” Telkom Media’s Ngcobo says.
The argument is that new entrants in the market will find it very tough to attract new customers unless they can offer them premium content like the PSL matches, Super 14 Rugby or international events like the Olympic Games.
Some experts’ believe that a pay-TV service is often selected for a single or only a few key channels, and if a single company has the rights to this content other players may find it very tough in the early stages of operation.
Multichoice is not planning to relinquish its tight grip on the local pay-TV market without a fight. Its CEO Nolo Letele says that exclusivity of content is vital in the pay-TV business and that his company will fight hard to secure exclusivity on content. Letele further points out that he does not foresee content contracts, which are already in place, being cut short by the regulator.
Apart from its current content, Multichoice is planning to launch a few new channels. These include E! Style, Animax, Sony Entertainment Television, One Gospel and a second run movie channel.
A bidding war can be expected for popular content like local sport. Telkom Media is expected to win a few of these tussles as they have extensive funds at their disposal. ODM and e.sat may find the going a bit tougher may have to look at collaboration or alternative agreements to secure premium content.
Decoder sharing
Another prominent question in the pay-TV market is whether other providers will be allowed to make use of Multichoice’s decoders to deliver services to subscribers. The company says that this issue has not been addressed yet and that the matter will have to be tackled by ICASA.
According to Multichoice CTO Gerdus Van Eeden their current decoders are not technically suitable for a multi-smartcard environment as the current built makes decoder sharing impossible.
Van Eeden points out that a multi-smartcard and multi-service environment will require purpose built apparatus, taking the technical requirements of all the providers into account.
The long awaited battle in the pay-TV arena has started, and while the companies involved may find the going tough, consumers stand to win from this increased competition. So sit back, get out the popcorn and watch the players fight it out. And don’t forget to save up for that High Definition TV.
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